Costs For New Hospital Not Forthcoming

The public heard about the $200 million tax levy for 10% of the total reported $2 billion cost of the new hospital and satellites, but it wasn’t clear what that pays for. A response to my email to Windsor Regional Hospital in August 2016 confirmed some issues.

Construction cost for the project does account for close to 65% of the total cost. On top of that, there are various fees that are calculated on a percentage basis including construction contingencies, project ancillaries (architectural fees, testing and inspections, building permits, legal fees, kitchen consultants, etc.), moving allowances and equipment allowances.

… The cost share between the province and the hospital for each of these varies. It can range from 100% hospital responsibility (e.g. equipment) to 100% ministry funded (e.g. architectural fees). – Allison Johnson, Manager, Communications, Windsor Regional Hospital

So 10% of construction only accounts for approximately $130 million of the tax levy. The use of the other $70 million remains rather vague and not fully accounted for.

Recently the Windsor Star reported, “… the Windsor Regional Hospital Foundation has established a goal of raising $150 million over 10 years to purchase equipment for inside the new facilities, Musyj said.”

This is the first mention of the cost of equipment in the media to my knowledge, other than by me. However, the number reported in the Economic Impact statement is higher. Furnishings, fixtures, and equipment and an IT allowance will cost $235.8 million, in 2015 dollars, and estimated to be $266,753,352 at the time of construction.

It remains unclear where they will get the other $117 million, perhaps partially from the tax levy, but not the province.

At the December 21, 2015, Windsor Council meeting, when the tax levy was introduced, Rino Bortolin cited the city engineer estimating the cost of infrastructure to the new hospital at $220 million. David Musyj, however, disagreed, saying the costs were more like $25 million and that any additional costs were already planned under the Lauzon Pkwy Environmental Assessment.

My understanding is that EA was never entered into the city budget for future use. The numbers remain up for debate for lack of clarity.

Following that debate, Bortolin put forth a motion that the city administration report on the cost to the city for the new hospital. That motion failed.

Neither the city nor the hospital have presented an accurate estimate of the costs to the city. Musyj said that throwing inaccurate numbers out there on social media could kill the project. So, presenting accurate and reasonable numbers in the media would be a solution.

That has never been done.

The subtotal, so far, is $200 million tax levy, $25 million to $220 million for infrastructure, $150 million to $267 million for furniture and equipment. We have a range of $392 million to $687 million to be paid for by the local community.

But, wait. There’s more.

It is also known that the province doesn’t pay for, “Non-eligible Construction, Non-service related facilities such as cafeteria, retail space, parking facilities and other revenue generating areas”. New hospitals don’t just come with a cafeteria and parking lot, they include a few fast food restaurants and retail outlets, all paid for locally by either the community or the hospital.

Windsor Regional Hospital’s site selection criteria also mentions possible buildings for medical offices and long term care facilities. There is no mention of who pays for these facilities and who profits from them.

In other communities I have seen, the split of the profits from revenue generating areas for the private partners is reportedly quite low. But, they also have the maintenance contract for these facilities and the private profits from maintenance are considered a part of the hospitals costs.